PART 1:The following comparison of budgeted cash flow and actual cash flows has been prepared for Donna's Diner for the quarter ending 30 September 2017

Budget Actual

$ $

Receipts

Cash fees 24000 32000

Collections from debtors 12000 14500

Loan from ABC Finance Company 5000

GST Collected 2400 3200

Payments

Wages 6000 6500

Insurance 800 840

Suppliers 14000 16400

Postage and telephone 400 380

Purchase of new equipment 5000 4600

Cleaning of shop 1200 1200

Drawings 4500 3800

GST Paid 2140 2342

The business had $500 in the bank on 1 July 2017

A.Prepare budget variance report for the quarter ended 30 September 2017 to reveal the significant differences between the budgeted and actual data

B.What was the predicted cash balance on 30 September?

C.What was the actual cash balance on 30 September?

D.State, and explain, the major causes of the difference between the budgeted and actual bank balance

E.Do you think that the quarterly period is appropriate for cash budgeting?Give reasons for your answer

PART 2:Following from Part A, you are to arrange a time to talk with your assessor (who will role-play the manager for Donna's Diner) and identify the possible cause for any unfavourable variances.You are to take into consideration the information you obtain, and then develop a projected cash flow budget for the next 1 month.

Prior to meeting with the supervisor it is important that you are prepared.This means you must know what you need to ask, as you will need this information to complete the next cash flow budget.

After the meeting, you are to develop a cash flow budget (for October 2017), and submit it along with a written report outlining the variations made and reasons.